IndiGo Crisis Airfare Intervention: Union Aviation Minister Ram Mohan Naidu said in the Lok Sabha that it is not possible to set a cap on airfare across the country, as the deregulated market is beneficial for passengers in the long run.
Airfare Deregulation: Union Aviation Minister Ram Mohan Naidu said in the Lok Sabha on Friday that it is not possible to set a limit on airfares in the entire country. He said that deregulated market is most beneficial for passengers. The minister said that ticket prices usually increase during the festive season because the demand is very high at that time. Naidu explained that when deregulation was implemented in the aviation sector, the objective was to grow the sector and encourage new players to enter the market. He said, ‘In all the countries which have expanded their aviation sector, there was a deregulated market. This brings in more players and increases opportunities for collaboration. You let market dynamics do the work. Demand and supply balance in their own way. In the end, it is the passenger who benefits the most.
Why are tickets expensive during festive season?
The minister said that it is normal for ticket prices to increase during the festive season. Prices increase due to high demand on certain routes and at certain times. Therefore it is not possible to limit prices on any sector throughout the year. Demand and supply automatically control airfare. However, Naidu also clarified that this does not mean that there is complete freedom for airline companies. The government still has enough powers to control air fares if needed and protect passengers from such problems.
Government power and interference
The existing Aircraft Act empowers the government to intervene in exceptional circumstances where airlines charge higher prices. Naidu also gave examples of this. When demand increased unusually during the Covid crisis, Mahakumbh and Pahalgam terror attack, the government used special powers and controlled airfares. Recently this was also done during the Indigo crisis. Apart from this, the minister gave the example of ‘Fare Se Fursat’ scheme, in which the government fixed fares for 25 routes, especially for North-East and South India.
Why is deregulation important?
Naidu said that merely controlling prices is not enough. The government has to take into account the entire aviation ecosystem, airlines, airports and operational networks. Deregulated market makes the sector stronger in the long term and new players can enter the market. The minister also pointed out that airfares in India have actually become cheaper over time, when adjusted for inflation. He said, ‘If we compare Indian airfares with other countries, the growth rate is actually negative. In real terms, prices in India have fallen by 43% in terms of CPI. In America it is 23%, in China it is 34%.